Summary of key risks and our response

We have mapped our risk and response to respective capitals.

Geographical and Channel Concentration

Risk response

• Under Rural Vistaar initiative, Havells India is now the most penetrated FMEG brand in rural markets through the presence of rural distributors in 3,000 towns under POP strata of 10k-50K, covering 40k+ retail points
• In our endeavour to reach <10k population towns, a new Rural Retail initiative was started called Havells UTSAV exclusive store, wherein a pilot of 50+ stores was completed in FY 2021-22, with a target of 1,000 stores by FY 2022-23
• Separate team has been created to focus on MFR/RR, CPC/CSD and E-Commerce
• Adopted DMDC (different models for different channels) to avoid conflict with existing channel

Technological Obsolescence

Risk response

• Leveraging our strategic investments to drive consumer centric innovations in new products development with quick time to market and sizable revenue contribution

Key product innovations and technology upgrades:

− Magnatron induction water heater
− Stealth Puro Fan with integrated air purifier
− Stealth Air BLDC Fan
− Hexo heavy duty 1000W juicer-mixer-grinder
− EURO certified Arc Fault Detection Device (AFDD)

Brand Positioning and Impact of Digitalisation and Social Media

Risk response

• Digital command centre for engaging with both online and offline customers w.r.t grievances, feedback and marketing
• Established system for online reputation management
• The Company keeps a track of brand perception and continuously conduct brand audit and monitor brand health parameters

Compliance

Risk response

• Company follows 'Zero Tolerance' Policies w.r.t non-compliance
• Consequence Management Grid has been established
• Periodical nosiness process review by Internal Audit team (Both In-house as well as outsourced) across locations
• Compliance status along with exception (if any) reported to Senior Management, Audit Committee and Board of Directors
• Compliance refresh is done as and when applicable or half yearly basis, whichever is earlier

Protection of Intellectual Property Rights and Counterfeit Products

Risk response

• There is a defined mechanism to protect our intellectual property such as trademarks, logos, patents, and design of our products by registering under relevant acts
• To protect our intellectual property, we are taking appropriate civil and criminal actions, both Domestically and Internationally

Material Management

Risk response

• Major Commodities - Copper, Aluminum, Steel, Engineering Plastics etc. and their buying is based on average price model, linked to LME, or related indexes
• Average price is further benchmarked against Current market prices (Domestic/International) periodically
• Alternate sourcing avenues identified regularly for critical parts and raw materials for de-risking
• Import dependency has been reduced to less than ~20% of total sourcing

After Sales Service

Risk response

• There is established mechanism to address customer complaints on priority
• Monitoring customer loyalty cum satisfaction index through NPS methodology, current score:68
• Use of Automation and enhanced technology for better customer experience
• Service personnel are given online and offline trainings on technical aspects and soft skills to improve service quality
• 91% customer given 5 rated rating to our service technician

Supply Chain Management

Risk response

To manage supply disruption and avoid inventory obsolescence, No. of steps have taken e.g.:

• Calendarised recurring and planned events with proactive actions
• Integrated and Flexible Network to meet business requirements
• SKU rationalisation to optimised inventory level
• Focus on adoption of new age technology to ensure sustainable systematic efficiency

Quality Assurance

Risk response

• There is established mechanism to address customer complaints on priority
• Monitoring customer loyalty cum satisfaction index through NPS methodology, current score:68
• Use of Automation and enhanced technology for better customer experience
• Service personnel are given online and offline trainings on technical aspects and soft skills to improve service quality
• 91% customer given 5 rated rating to our service technician

Information and Cyber Security

Risk response

• Company has well defined Information Security Governance Structure
• IT function has been accredited with ISO 27001: 2013 certification (The International Information Security Framework)
• Refreshed existing IT Policies in line with ISO 27001:2013 standards
• In line to protect from emerging threats, further enhanced security posture by adopting ZERO Trust architecture
• Adopted next Gen Firewall, EDR/XDR, SASE and DLP
• AIML Based security solutions are used to protect from cyber threats.
• Identity Protection
  − Privilege Identity and Access Management
  − Implementation of Multi Factor Authentication (MFA) for critical apps (Email, Teams, OneDrive)
• Business continuity plan (BCP) and DC/DR (Data Centre/ Disaster Recovery) into different seismic zone

Environmental, Social and Governance (ESG)

Risk response

• Our manufacturing plants are ISO, 14001 45001, 50001 certified
• Global Benchmarking is done w.r.t. Environment, Health and Safety
• Creating positive impact through our CSR programs. Through our initiative for green cover, we have planted more than 15 lakhs trees so far
• 3^rd Party Impact Assessment of our CSR initiatives are carried out.
• Morgan Stanley ‘s MSCI ESG rating improved to ‘A’
• Included in Financial Times Stock Exchange-Russell Group’s FTSE4Good ESG Indices and DJSI Yearbook